EUROPEAN COMMISSION...EUROPEAN COMMISSION DG Competition Case M.9759 - NEXI / INTESA SANPAOLO...

EUROPEAN COMMISSION

DG Competition

Case M.9759 - NEXI / INTESA SANPAOLO (MERCHANT

ACQUIRING BUSINESS)

Only the English text is available and authentic.

REGULATION (EC) No 139/2004

MERGER PROCEDURE

Article 6(1)(b) NON-OPPOSITION

Date: 26/06/2020

In electronic form on the EUR-Lex website under

document number 32020M9759

Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË Tel: +32 229-91111. Fax: +32 229-64301. E-mail: [email protected].

EUROPEAN COMMISSION

Brussels, 26.06.2020

C(2020) 4432 final

PUBLIC VERSION

To the notifying party

Subject: Case M.9759 – Nexi/Intesa Sanpaolo (Merchant Acquiring business)

Commission decision pursuant to Article 6(1)(b) of Council Regulation

No 139/20041 and Article 57 of the Agreement on the European Economic

Area2

Dear Sir or Madam,

(1) On 19.05.2020, the European Commission received notification of a proposed

concentration pursuant to Article 4 of the Merger Regulation by which Nexi S.p.A.

(“Nexi”, Italy) acquires within the meaning of Article 3(1)(b) of the Merger

Regulation sole control of the whole of Intesa Sanpaolo S.p.A.’s (“ISP”, Italy)

merchant acquiring business (“ISP Acquiring”) (the “Transaction”).3 Nexi is referred

to as the “Notifying Party” and, together with ISP Acquiring, they are referred to as the

“Parties”.

1. THE PARTIES

(2) Nexi is the holding company of a group primarily active in Italy in payment services.

Nexi is active in the card payment systems sector in Italy and provides a full range of

services for merchants, such as merchant acquiring services, processing services and

supplies of point of sale (“POS”) terminals and related services via its subsidiary Nexi

Payment S.p.A. (“Nexi Payments”). Other Nexi subsidiaries also provide services

such as ATM management and digital corporate banking services. Nexi is controlled

by Mercury UK Holdco Limited (“Mercury Holdco”), which holds 52.45% of its share

capital. Mercury UK Holdco is in turn indirectly jointly controlled by funds managed

1 OJ L 24, 29.1.2004, p. 1 (the “Merger Regulation”). With effect from 1 December 2009, the Treaty on the

Functioning of the European Union (“TFEU”) has introduced certain changes, such as the replacement of

“Community” by “Union” and “common market” by “internal market”. The terminology of the TFEU will

be used throughout this decision.

2 OJ L 1, 3.1.1994, p. 3 (the “EEA Agreement”).

3 Publication in the Official Journal of the European Union No C180, 29.05.2020, p. 17.

2

by Advent International Corporation (“Advent International”) and funds managed by

Bain Capital Investors, L.L.C. (“Bain Capital”), both private equity investment firms.

(3) ISP is an Italian banking group that is listed on the Italian stock exchange and is not

controlled by any person or persons within the meaning of the EU Merger Regulation.

ISP Acquiring is the in-house merchant acquiring business of ISP. ISP Acquiring

provides merchant acquiring services primarily in Italy and exclusively to ISP

customers. More specifically, ISP Acquiring supplies merchant acquiring services

internally to ISP‘s banking customers. Such services are often bundled with other

banking and financial services provided to the bank’s customers, which are the

merchants at the retail level of the value chain. ISP Acquiring provides merchants with

POS and web-enabled merchant acquiring services, as well as various types of POS

terminal solutions.

2. THE OPERATION

(4) On 19 December 2019, Nexi and ISP entered into a Contribution Agreement pursuant

to which Nexi would acquire ISP Acquiring and designate either Nexi Payments or

Mercury Holdco as the purchaser of the whole of ISP Acquiring. As a result of such

designation, occurred on 17 February 2020, and following the completion of the

Transaction, Nexi, through Nexi Payments, will acquire sole control over ISP

Acquiring. The Transaction is therefore a concentration within the meaning of Article

3(1)(b) of the EU Merger Regulation.

(5) Following the closing of the Transaction, ISP separately agreed with Mercury Holdco

to reinvest part of the proceeds that it will receive from the sale of ISP Acquiring in

the purchasing a 9.9% non-controlling shareholding into Nexi in an ancillary

transaction.4 The latter is merely a portfolio investment and will not confer any

governance rights to ISP.

(6) Pursuant to the Contribution Agreement and following the completion of the

Transaction, the Parties will enter into a merchant digital acceptance business

4 This minority shareholding will not create risks of coordinated behaviour in any of the markets relevant to

the present Decision since, following the cession of its merchant acquiring division (ISP Acquiring) to Nexi,

ISP will no longer be active in any of these markets (wholesale or retail merchant acquiring, the provision

of POS terminals or acquiring processing services). In particular, this minority shareholding has no impact

on the assessment of potential coordinated effects carried out by the Commission in Section 4.5.3 of this

Decision. In addition, the Notifying Party confirmed in its response to the Commission’s RFI 11, dated 24

June 2020, that this shareholding will not provide ISP with information rights different from the ones

guaranteed to any other Nexi’s minority shareholder. The Notifying Party explains that, being a listed

company, under Italian law, Nexi is subject to disclosure obligations vis-à-vis its shareholders and the

market on a non-discriminatory basis. As such, it appears that, through the acquisition of this minority

shareholding, ISP will not gain access to any privileged information rights into Nexi’s activities. To this

respect, the Commission also notes that in the course of a call with a competitor of the Parties on 17 March

2020, the competitor of the Parties stated that: “With regard to the remuneration part of the Transaction,

according to which ISP could acquire 10% of shares in Nexi, [Competitor] considers that the stake obtained

by ISP does not allows direct intervention of ISP in the governance of Nexi and that therefore ISP will not

be able to exercise significant influence on the Nexi’s activities.”

3

agreement (the “MDAB Agreement”) and into an ancillary service agreement

(“ASA”).5

(7) According to the MDAB Agreement, ISP will promote Nexi’s merchant acquiring

products and services to ISP’s [BUSINESS SECRET – STRATEGIC DECISIONS]

merchants. The overall duration of the relationship between ISP and Nexi is

[BUSINESS SECRET REGARDING DURATION OF THE RELATIONSHIP] years,

[BUSINESS SECRET – STRATEGIC DECISIONS]. The provisions of the MDAB

Agreement reflect the fact that the ISP Acquiring business, being purchased by Nexi,

obtains all its merchant customers from referrals by ISP’s banking business, which has

a commercial direct relationship with these merchants and provides them with a range

of banking and other financial services. While Nexi will take over merchant acquiring

services, these merchants will preserve their current commercial relationship with ISP

for the provision of all the other banking services.

(8) Pursuant to the ASA, ISP will provide Nexi with certain services in order to allow the

latter to manage the merchant acquiring business transferred to it.

3. EU DIMENSION

(9) The undertakings concerned have a combined aggregate world-wide turnover of more

than EUR 5 000 million (2018: Nexi6: EUR [BUSINESS SECRET – FINANCIAL

INFORMATION], ISP Acquiring EUR [BUSINESS SECRET – FINANCIAL

INFORMATION]).7 Each of them has an EU-wide turnover in excess of EUR 250

million (2018: Nexi: EUR [BUSINESS SECRET – FINANCIAL INFORMATION], ISP

Acquiring: EUR [BUSINESS SECRET – FINANCIAL INFORMATION]), but they do

not achieve more than two-thirds of their aggregate EU-wide turnover within one and

the same Member State. The notified operation therefore has an EU dimension.

4. COMPETITIVE ASSESSMENT

4.1. Introduction and the Parties’ activities

(10) The Transaction combines ISP’s in-house merchant acquiring services with Nexi, a

payment services provider active in Italy. In 2016, Nexi previously acquired ISP’s

acquiring processing services, and the present Transaction is additive to that deal.8 The

Transaction results in a horizontal overlap in merchant acquiring services. In addition,

the Transaction will result in the creation of vertical links with respect to some related

5 In relation to the MDAB and the ASA, the Commission notes that pursuant to Article 6(1)b, second

subparagraph of the Merger Regulation, a decision declaring a concentration compatible with the internal

market is deemed to cover restrictions directly and necessary to the implementation of the concentration, so

called “ancillary restraints”. As a matter of principle, it is incumbent on the notifying parties to determine

whether and to what extent agreements accompanying a concentration may qualify as ancillary restraints

within the meaning of that provision. Restraints that are not covered by a decision pursuant to Article 6(1)b

of the Merger Regulation may fall within the scope of application of antitrust rules. In this respect, the

Commission Notice on restrictions directly related and necessary to concentrations, OJ C 56, 5.03.2005,

p.24, provides further guidance.

6 Nexi’s turnover includes the turnover of its parent companies, Advent International and Bain Capital.

7 Turnover calculated in accordance with Article 5 of the Merger Regulation.

8 See Case M.9073 – Advent International / Bain Capital / Setefi Services / Intesa Sanpaolo Card.

4

activities within card payment systems. This section will therefore provide a brief

description of card payment systems and the affected activities.

(11) Card payment systems available to the public allow a cardholder to use a payment

card, such as a debit or a credit card, to pay for products and services purchased at

stores (physical or on-line) without using cash. Through these systems, the merchants

are connected with financial institutions, namely the bank issuing the card (issuer

bank) and the bank endorsing the cash-less payment to the benefit of the merchant

(acquirer bank), to execute the entire transaction from the moment of payment at the

point of sale (“POS”) until the merchant’s account is credited.9

(12) Figure 1 provides an overview of the actors and main steps in a typical card payment

transaction.

Figure 1: Overview of electronic payment transaction Source: Notifying Party

(13) A card payment transaction begins when the cardholder uses a payment card to pay

for the purchase of goods or services from a merchant. The merchant will seek

authorisation for the transaction from its merchant acquirer. The authorisation request

is transmitted from the merchant’s POS terminal (card reader) in which the customer

entered their card. Subsequently, the authorisation request is sent to the acquirer

processor, which will identify the scheme network to which the payment card belongs

and transmits the request to the issuer processor. The issuer processor will perform

checks, such as whether the card is valid and whether the card holder’s account

contains sufficient funds. The result of the authorization request is sent back to the

POS terminal; if the transaction is authorised, the merchant can be sure of payment.

(14) The setup described above can be subject to some variations across countries. A

variety of players are active in the card payment process, such as banks, payment

9 See also Case M.7873 – Worldline/Equens/Paysquare for another presentation of card payment systems.

5

service providers (“PSPs”), and scheme networks. In most cases, an actor is involved

in multiple stages of the process. In the case at hand, the Parties’ activities only overlap

horizontally in merchant acquiring, as this is the only activity in the card payment

process that ISP Merchant acquiring carries out. Merchant acquiring can be defined

as follows:

(a) Merchant acquiring: a set of services that enable merchants to accept

payment cards at POS terminals. Merchant acquirers sign contracts with

merchants (who are thus the customers of merchant acquirers), maintain the

merchant-customer relationship and ensure that merchants receive the funds

following the card payment transactions. ISP Acquiring provides merchant

acquiring services directly to merchants who are ISP customers.10 Nexi also

provides merchant acquiring services directly to merchants. Internally, Nexi

refers to this distribution channel as the Direct model. Moreover, under its so-

called Referral model, Nexi provides merchant acquiring services directly to

merchants that have been recruited by banks in exchange for a percentage of

the merchant fee set by Nexi.11 Finally, under the so-called Licensing model,

Nexi provides merchant acquiring services to banks, which will in turn provide

these to merchants, possibly in conjunction with other financial services. In

this model, Nexi negotiates and has a contractual relationship with banks. The

banks in turn have a commercial relationship with merchants and set the

commercial terms, including the price.12 In the rest of this decision, this last

type of activities will be referred to as “wholesale merchant acquiring”, and

the Direct and Referral models as “retail merchant acquiring”. The present

decision will discuss whether wholesale merchant acquiring and retail

merchant acquiring jointly constitute a single product market or should be

considered as separate product markets.

(15) In addition, other activities within the payment process are affected non-horizontally:

(a) Acquiring processing services: the merchant-oriented side of technically

processing a transaction. This includes the network routing of payments

towards the issuer processor and POS authorisation. Merchant acquirers can

either provide acquiring processing in-house, or outsource it to third party

processors. Today, ISP Acquiring sources acquiring processing services from

Nexi on an exclusive basis. Conversely, Nexi’s acquiring processing services

are provided almost exclusively to ISP Merchant Acquiring, for the majority

of its other acquiring processing needs, Nexi outsources these activities to third

parties.13

(b) POS terminal and related services: the provision of POS terminals (card

readers) to merchants, either on a rental or purchase basis, as well as related

services such as maintenance. Today, ISP Merchant Acquiring sources its POS

terminals and related services exclusively from Nexi.14

10 Form CO, paragraph 6.





6

(16) Finally, Nexi is also involved in other activities related to card payment systems which

are not affected by the Transaction, such as issuing processing services, card issuing

ATM management and digital corporate banking services.15

4.2. Market definitions

(17) While the Commission has previously defined a separate product market for merchant

acquiring services (see Section 4.2.2.1), so far, it has not assessed the existence of

separate markets for retail merchant acquiring (to merchants) and wholesale merchant

acquiring (to banks). The Notifying Party submits that retail merchant acquiring and

wholesale merchant acquiring constitute two distinct product markets.16 The Notifying

Party’s reasoning and the Commission’s assessment in that respect will be further

developed in Section 4.2.1, which will focus on wholesale merchant acquiring.

(18) The main focus of the case is merchant acquiring, which comprises a set of services

that allow merchants to accept card-based payments. A description of merchant

acquiring and its role in the broader card payment system is provided in Section 4.1.

4.2.1. Wholesale merchant acquiring

(19) Nexi considers itself to be active in the provision of merchant acquiring services at

wholesale level to banks. It explains that prior to 2015, Italian banks were either

vertically integrated in the provision of merchant acquiring services, or they sourced

merchant acquiring services only from ICBPI, a body that included as shareholders

several Italian cooperative banks (generally regional banks). ICBPI was at that time

the only organisation providing such services in Italy. In 2015, ICBPI was acquired

by Advent International and Bain Capital,17 and subsequently rebranded to Nexi in

2017. Under the terms of the deal, Nexi obtained [BUSINESS SECRET – SALES

STRATEGY] contracts lasting [BUSINESS SECRET – SALES STRATEGY] years with

a number of banks for the provision of merchant acquiring services. Since this date,

the market for wholesale merchant acquiring in Italy emerged and grew.

(20) According to Nexi, wholesale merchant acquiring can be described as the activity by

which a merchant acquirer enters into contractual relationships with partner banks to

provide them with merchant acquiring services and POS terminals. The wholesale

merchant acquirer negotiates and has a contractual relation with the partner banks,

which in turn have a commercial relationship with merchants and set the commercial

terms and economic conditions for acquiring services. In particular, the partner banks

retain control over the pricing of merchant acquiring services they provide to their

customers. As mentioned in paragraph (14), Nexi internally designates its wholesale

activity as the Licensing model.



17 See Case M.7711, Advent International/Bain Capital/ICBPI, decision of 16 September 2015.

7

4.2.1.1.Product market definition

Commission’s precedents

(21) The Commission has not yet considered separate markets for retail merchant acquiring

(to merchants) and wholesale merchant acquiring (to banks).

The Notifying Party’s view

(22) The Notifying Party submits that there is a distinct wholesale market for the provision

of merchant acquiring services to banks (by PSPs), separate from the retail provision

of merchant acquiring services to merchants.18

(23) To support this statement, the Notifying Party submits that retail merchant acquiring

and wholesale merchant acquiring are separate levels of the value chain, where

wholesale customers (banks) have full freedom to set the final price and conditions to

their own retail customers (merchants) without any intervention of the provider of

wholesale merchant acquiring services in the commercial relationship between the

bank and the merchant.19 The Notifying Party also explains that ISP does not and could

not compete at wholesale level,20 and that combining wholesale and retail volumes

would lead to the double counting of the volumes that were sold at wholesale level to

banks and then resold, at retail level, by those same banks, to their customers.21 The

Notifying Party also claims that since banks are sophisticated players, the customer

base and the competitive dynamics in place at wholesale level are different from the

ones at retail level.22 Moreover, the Notifying Party submits that on a per-customer

basis, wholesale transaction volumes are significantly larger than retail volumes. The

average bank sources about EUR [BUSINESS SECRET – MARKET POSITION –

KNOW-HOW] million per annum in merchant acquiring transaction value from Nexi,

while the average merchant sources around EUR [BUSINESS SECRET – MARKET

POSITION – KNOW-HOW] per annum.23 In terms of pricing, the Notifying Party

explains that prices for wholesale services are significantly lower than retail prices for

comparable merchant books, indicating a price difference of around [20-30]%.24

Finally, the Notifying Party submits that the number of wholesale and retail customers

differs substantially: Nexi has [BUSINESS SECRET – NUMBER OF CUSTOMERS]

wholesale customers and about [BUSINESS SECRET – NUMBER OF

CUSTOMERS] times as many retail customers.25









8

The Commission’s assessment

(24) The Commission’s market investigation gave sufficient evidence to conclude that, in

the Italian context, the definition of a separate product market for wholesale merchant

acquiring is appropriate.

(25) The majority of merchant acquirers indicated that wholesale merchant acquiring is

either a genuine separate market or an alternative channel of distribution for the

wholesaler where the customer bank retains freedom in terms of pricing. When asked

directly whether the distinction between wholesale and retail merchant acquiring is

relevant in Italy, a large majority indicated that the distinction is relevant.26 With

regard to contract features between wholesale merchant acquirers and their customers,

the large majority indicates that the contracts do not stipulate an exclusive relationship

and provide for pricing freedom at retail level for the bank.27

(26) Finally, it is noteworthy that there are merchant acquiring players in Italy that are

active in merchant acquiring exclusively on a wholesale level, such as SIA.28

(27) In light of the above and for the purposes of the assessment of the Transaction, the

Commission considers that wholesale merchant acquiring constitutes a separate

product market.

4.2.1.2.Geographic market definition


(28) The Commission has not yet considered separate markets for retail merchant acquiring

(to merchants) and wholesale merchant acquiring (to banks). As mentioned below in

paragraph (46), the Commission has considered in the past that the market for

merchant acquiring is likely national in scope, except for merchant acquiring services

for payments made through web-enabled interfaces (e-commerce) which were

considered to be at least EEA-wide. The precise scope of the geographic market

definition was ultimately left open.


(29) The Notifying Party submits that the relevant geographic market for wholesale

merchant acquiring is EEA-wide, and considers that the same arguments that have

been put forward in its claim that the relevant geographic market for retail merchant

acquiring is EEA-wide also apply to wholesale merchant acquiring.29


(30) As will be described in more detail for retail merchant acquiring in Section 4.2.2.2,

wholesale merchant acquiring also shows a trend towards an EEA-wide market.

26 Responses to questions 7 and 9 of Q2 – Questionnaire to merchant acquirers.

27 Responses to question 8 of Q2 – Questionnaire to merchant acquirers.



9

(31) Much like the majority of retail merchant acquiring customers, the majority of

wholesale merchant acquiring customers indicated in the Commission’s market

investigation that there are no significant barriers to acquiring these services from

outside Italy.30

(32) For wholesale merchant acquiring in Italy, the barrier that domestic scheme networks

can pose to international acquiring appear less relevant. Many banks that source

merchant acquiring services on the retail market indicate that they retain merchant

acquiring of the Italian domestic PagoBancomat scheme in-house31 and Nexi does not

offer wholesale merchant acquiring for the PagoBancomat scheme.32

(33) Ultimately, the question whether the appropriate geographic market definition is EEA-

wide or national can be left open, as the Commission finds that the Transaction does

not cause competitive concerns for either geographic market definition.

4.2.2. Merchant acquiring at retail level



(34) The Commission has previously defined a separate product market for merchant

acquiring services.33 While in a number of previous cases, the Commission included

the provision of POS terminals within the market for merchant acquiring,34 in more

recent cases,35 the Commission has considered separate product markets for the

provision of merchant acquiring services and the provision of POS terminals and

related services.

(35) In previous decisions,36 the Commission considered that the merchant acquiring

market could be further subdivided on the basis of the following criteria: (i) types of

payment card schemes (international/domestic), (ii) payment card brands (e.g. Visa,

Mastercard), (iii) type of payment card (debit/credit), and (iv) based on whether the

service relates to a physical payment via a POS terminal or a web-based payment (e-

commerce). In all previous cases, the Commission left the precise scope of the product

market definition open. The Commission has not yet considered separate markets for

large merchants and small or medium merchants (“SMEs”).

30 Response to question 2 of Q2 – Questionnaire to merchant acquirers.



33 See for example Cases M.7873 – Worldline/Equens/Paysquare, M.7241 - Advent International/Bain

Capital Investors/Nets Holding, M.7711 - Advent International/Bain Capital/ICBPI, M.6956 -

Telefonica/Caixabank/Banco Santander and M.5241 - American Express/Fortis/Alpha Card.

34 See Cases M.5241 – American Express/Fortis/Alpha Card, M.7241 – Advent International/Bain Capital

Investors/Nets Holding and M.7711 – Advent International/Bain Capital/ICBPI.

35 See Cases M.7873 – Worldline/Equens/Paysquare, M.9357 – FIS/WorldPay and M.9387 – Allied Irish

Banks/First Data Corporation/Semeral.

36 See for example Cases M.7873 – Worldline/Equens/Paysquare, M.7241 - Advent International/Bain

Capital Investors/Nets Holding, M.7711 - Advent International/Bain Capital/ICBPI, M.6956 -

Telefonica/Caixabank/Banco Santander and M.5241 - American Express/Fortis/Alpha Card.

10


(36) In relation to the retail level of merchant acquiring services, the Notifying Party

submits that merchant acquiring and the provision of POS terminals and related

services jointly constitute a single relevant market.37 The Notifying Party’s reasoning

in that respect will be further developed in Section 4.2.3.

(37) The Notifying Party further submits that the other possible subdivision previously

considered by the Commission are not appropriate for the reasons set out below:

(a) A segmentation by type of payment card (credit / debit) or segmentation

by card brand would no longer relevant in light of evolution in the market.

The Notifying Party submits that, from a supply side perspective, merchant

acquirers typically provide services for both credit and debit cards and most

card brands and that the POS terminals provided by merchant acquirers accept

most cards. In addition, the Notifying Party considers that the service offered

is the same in both cases. From a demand side perspective, the Notifying Party

indicates that merchants typically want to be able to accept as many different

card types as possible.38

(b) A segmentation by card scheme (domestic / international) would be

inappropriate in light of the substitutability between the two schemes. The

Notifying Party submits that, from a supply-side perspective, most merchant

acquirers can handle both types of card schemes, and POS terminals support

both as well. From a demand-side perspective, the Notifying Party argues that

most merchants request acquiring services for both card schemes. Finally, the

Notifying Party indicates that, while historically domestic cards were debit-

based and international cards credit-based, today that characterisation no

longer applies because many debit cards in Italy run either solely on an

international card scheme (such as Maestro or V-Pay) or are co-badged with

an international debit card scheme.39

(c) A segmentation by payment type (physical POS transactions / e-commerce

transactions) would not be relevant due to evolution of the market. The

Notifying Party submits that the boundary between physical POS terminal

transactions and web-based transactions is expected to blur in the short term

due to the growth in e-commerce transactions. From a demand-side

perspective, the Notifying Party submits that this blurring boundary is

evidenced by the rising popularity of so-called “omni-channel” models, by

which the merchant acquirer serves as a one-stop-shop for all the merchant’s

sales channels, both physical sales and online.40

(38) Similarly to the potential sub-segments proposed in the Commission’s past decision

practice for POS terminals (see below in paragraphs (60) onwards), the Notifying

Party, [BUSINESS SECRET – INTERNAL PROCESSES], has put forward potential

separate sub-segments for retail merchant acquiring services based on the size of the

customers. More precisely, the Notifying Party has provided separate market shares





11

for merchant acquiring services provided to SMEs and merchant acquiring services

provided to large merchants. The Notifying Party classifies merchants with less than

EUR [BUSINESS SECRET – INTERNAL PROCESSES] million per year in electronic

transactions as SMEs, and the rest as large merchants. The Notifying Party submits

that a sub-division of the merchant acquiring market by customer size is not

appropriate as customers are heterogeneous and differ on multiple dimensions, of

which size is only one.41


(39) The Commission’s market investigation was inconclusive on whether the sub-

segmentations considered in previous Commission decisions, namely (i) types of

payment card schemes (international/domestic), (ii) payment card brands (e.g. Visa,

Mastercard), (iii) type of payment card (debit/credit), and (iv) based on whether the

service relates to a physical payment via a POS terminal or a web-based payment (e-

commerce), are relevant.

(40) For all sub-segmentations listed, a slight majority of customers indicated that

merchant acquiring services are no different for any of the proposed sub-

segmentations. However, a majority of competitors did indicate differences,

specifically naming differences in pricing, as well as additional risks concerning e-

commerce transactions (e.g. fraud).42

(41) Concerning a differentiation between large customers and SMEs, the Commission’s

market investigation gave some indications pointing in the direction of separate

merchant acquiring product markets:

(a) Large merchants tend to source POS terminals separately from merchant

acquiring services more often than SMEs;43

(b) A larger proportion of large merchants consider that they have special needs

that only a limited number of merchant acquirers can meet, such as

reconciliation, authorization, settlement, dispute management and support for

large transaction volumes;44

(c) Large merchants tend to operate a significant number of POS terminals, and

require reactive support in their retail outlets throughout the country;45

(d) A larger proportion of large merchants considered that merchant acquirers

based outside of Italy credibly supply merchant acquiring services to

businesses in Italy and larger merchant more often indicated to switch to a non-

Italian merchant acquiring provider in case of a price increase.46


42 Responses to question 8 of Q1 – Questionnaire to merchants and question 17 of Q2 – Questionnaire to

merchant acquirers.

43 Responses to question 9 of Q1 – Questionnaire to merchants.



46 Responses to questions 15 and 17 of Q1 – Questionnaire to merchants.

12

(42) Additionally, the Notifying Party submits that large customers, more so than SMEs,

typically source their merchant acquiring services through tenders. While the

Commission considers this plausible, it was not able to conclusively confirm this in

the market investigation.

(43) However, the distinction between large merchants and SMEs remains blurred and to

a certain extent arbitrary. The above-mentioned differences and tendencies do not

allow the Commission to draw a clear line between large merchants and SMEs. For

example, the definition used by the Notifying Party (EUR [BUSINESS SECRET –

INTERNAL PROCESSES] million annual card transaction value) leads to a situation

where some multinational companies are defined as SMEs due to their limited card

payment volumes with the Parties in Italy. Moreover, the majority of both large

merchants and SMEs indicated not to have particular needs that distinguish them from

other merchants.47 Additionally, some customers defined as SMEs may exhibit

sourcing behaviours associated with large merchants, namely the use of tender

processes and separation between merchant acquiring services separate from POS

terminals, and vice versa.

(44) For the purpose of the assessment of this Transaction, the Commission therefore

considers that retail merchant acquiring for large merchants and SMEs form a

combined product market that is heterogeneous in nature and is characterised by

differentiated customer segments.

(45) The questions of whether the appropriate product market definition is merchant

acquiring as a whole or whether separate product markets exist for any of the

remaining segmentations listed in paragraph (35), which were considered in previous

decisions, can be left open, as the Commission finds that no competitive concerns arise

for any of the possible product market definitions.



(46) In past decisions, the Commission has considered the market for merchant acquiring

to be likely national in scope, except for merchant acquiring services for payments

made through web-enabled interfaces (e-commerce) which were considered to be at

least EEA-wide.48 The precise scope of the geographic market definition was

ultimately left open.


(47) The Notifying Party claims that the relevant geographic market for merchant acquiring

is EEA-wide, because of recent consolidation movements within the merchant


48 See Cases M.9387, Allied Irish Banks/First Data Corporation/Semeral, M.9357, FIS/Worldpay, and

M.7873, Worldline/Equens/Paysquare. This follows from the Commission’s previous decisions in e.g.,

M.6956, Telefonica/Caixabank/Banco Santander, and M.5241, American Express/Fortis/Alpha Card. See

also M.7241, Advent International/Bain Capital Investors/Nets Holding, para. 30, where the Commission

considered that the market for merchant acquiring services for all plausible market segmentations, except

web-enabled transactions, is most likely national in scope, whereas the market for merchant acquiring

services for payments made through web-enabled interfaces would be at least EEA-wide.

13

acquiring sector at EEA level,49 and increased competition from non-Italian, as well

as multinational merchant acquirers at the level of merchant acquiring in Italy.50 In

addition, the Notifying Party submits that merchants and banks tend more and more

often to procure merchant acquiring services at EEA level.51 With respect to this last

argument, the Notifying Party however acknowledges that, while it is particularly true

of large merchants, with retail stores in several countries, the argument only applies

to SMEs and smaller merchants to the extent that they migrate towards alternative

payment solutions (such as ApplePay, Samsung Pay and Google Pay) and on-line

payment solutions.

(48) The Notifying Party also explains that regulatory developments within the SEPA zone,

and in particular the so-called “passporting” rules provided under the second Payment

Service Directive (“PSD2”)52 now allow banks from other European countries to enter

the Italian market provided they comply with certain regulatory requirements and

apply for the relevant licenses in Italy.53 In this regard however, the Notifying Party

acknowledges the subsistence of domestic card schemes in several countries within

the SEPA zone (including Italy, with the PagoBancomat scheme) that require

compliance with slightly different procedures.


(49) As previously acknowledged by the Commission54 and submitted by the Notifying

Party, there is a trend towards harmonisation between Member States, opening up

national merchant acquiring markets to competitors from elsewhere in the EEA.

(50) The Commission’s market investigation supported the existence of this trend. Only a

minority of merchants consider that it would be challenging to procure merchant

acquiring services from merchant acquirers based outside of Italy, and approximately

half the customers indicated that they consider offers from non-Italian merchant

acquirers when sourcing merchant acquiring services.55 Furthermore, a majority of

customers indicated they would switch to a non-Italian provider in case of a small but

significant and non-transitory increase in price (“SSNIP”).56

(51) Despite this trend, there are still several factors that point in the direction of a national

market for merchant acquiring services.

(52) In response to the market investigation, a large majority of merchants based in Italy

indicated that they currently still source at national level.57 This is in line with the

49 Form CO, paragraphs 122 – 123.



52 Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment

services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and

Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC.


54 See, for example, case M.7873 - Worldline/Equens/Paysquare, paragraph 99.



57 Responses to questions 12 of Q1 – Questionnaire to merchants.

14

Notifying Party’s estimates according to which only [10-20]% of the Italian merchant

acquiring market is supplied by international players.58

(53) Additionally, the geographic footprints of merchant acquirers active in the EEA differ

significantly between the different countries. Only a limited share of players offer their

services truly throughout the entire EEA, whereas other players focus only on one or

several countries. The Parties clearly are among this latter group: Nexi is exclusively

active in Italy, and ISP Acquiring performs less than [0-5]% of its acquiring activities

outside of Italy.59

(54) Also, the market investigation found national specificities which point in the direction

of a national market. The domestic scheme networks are a key example of this. For

the countries which have a domestic scheme network, including Italy, cards under the

domestic scheme network, or under a domestic scheme network co-badged with an

international scheme network, are still widely used. According to the Notifying Party’s

estimates, PagoBancomat represents approximately [30-40]% of all card payments in

Italy.60 In the market investigation, only very few non-Italian merchant acquirers

indicated that they were able to provide merchant acquiring services for the Italian

domestic PagoBancomat scheme.61

(55) Despite the fact that PagoBancomat cards are often co-badged with an international

network scheme,62 the domestic scheme remains relevant. Many merchants and

merchant acquirers indicate that fees are lower for the domestic scheme.63 A large

customer indicated that about half of its card payments are PagoBancomat payments,

and that it considers it essential for its business to be able to accept PagoBancomat

payments.64

(56) Finally, merchant acquiring services are often procured in conjunction with POS

terminals; in the Commission’s market investigation, the large majority of customers

indicated they do so.65 For POS terminals, a majority of merchants and merchant

acquirers indicated that it is important for the supplier to have a local presence, for

example to provide local technical support.66

(57) In light of the above considerations, the Commission considers that the relevant

geographic scope of the provision of merchant acquiring services at retail level is

likely to be limited to Italy. Ultimately, the question of whether the appropriate

geographic market definition is EEA-wide or national can be left open, as the

Commission finds that the Transaction does not cause competitive concerns for either

geographic market definition.

58 Form CO, Table 14.

59 Form CO, footnote 4.

60 Form CO, Table 14 and 18. Shares by value of transactions in 2019.




merchant acquirers.

64 Non-confidential minutes of call with a customer, dated 18 March 2020.



merchant acquirers.

15

4.2.3. Provision of POS terminals and related services

(58) A POS terminal (or “POS”) is the electronic device used to process card payments at

the merchant's location. It is a necessary element for physical card based transactions.

POS terminals are either sold or leased to merchants. POS terminals are supplied either

together with the merchant acquiring services or on a standalone basis.

(59) There are different types of POS terminals: traditional POS terminals and mobile POS

(or “mPOS”) card readers. Traditional POS terminals connect to the merchant

acquirer’s system through the merchant’s fixed telephone line, through broadband (via

fixed cable or WiFi) or through the mobile telephone network. mPOS card readers

connect to the merchant’s mobile device (smartphone or tablet) via Bluetooth and an

app on that mobile device then connects to the merchant acquirer. POS terminals are

used by merchants of different sizes.



(60) As mentioned above in paragraph (34), while in a number of previous cases, the

Commission included the provision of POS terminals within the market for merchant

acquiring, in more recent cases the Commission has considered separate product

markets for the provision of merchant acquiring services and the provision of POS

terminals and related services.

(61) In FIS/Worldpay, the Notifying Party (Fidelity National Information Services, Inc.)

also suggested a potential sub-segmentation by type of POS device or based on the

size of the POS terminal customers; however, none of the respondents to the

Commission’s market investigation took a clear position as to whether a possible

relevant market for the supply of POS terminals should be sub-segmented further by

type of POS device or based on the size of the POS terminal customers.67 This

potential sub-segmentation was not looked into in the competitive assessment carried

out by the Commission in subsequent cases relating to POS terminals.68


(62) As explained above in paragraph (36), the Notifying Party submits that merchant

acquiring and the provision of POS terminals and related services jointly constitute a

single relevant market. To this effect, the Notifying Party explains that [BUSINESS

SECRET – SALES STRATEGY], and from a demand perspective the largest number of

customers are SMEs who do not distinguish between these two services and

systematically procure both as part of one and the same package, as they are mostly

unaware of the different steps of the card payment value chain, and find it more

convenient to source POS terminals and merchant acquiring services together.69

(63) While acknowledging the fact that some large merchants source POS terminals

separately from their merchant acquiring services, the Notifying Party considers that

this is only a reflection of the economic arbitrage these customers are making between

sourcing these products and services separately or procuring them through a bundled

67 See Case M.9357, FIS/Worldpay.

68 See Case M.9387, Allied Irish Banks/First Data Corporation/Semeral.

69 Form CO, paragraphs 111 and 112.

16

offer, and as such it should not be regarded as an indication of the existence of two

separate markets. Moreover, the Notifying Party considers that only a minority of large

merchants do so, and that at any rate, the distinction between large merchants and

SMEs is not clear-cut to this respect, because while it is mostly large merchants who

source POS terminals separately from their merchant acquiring services, some SMEs

may also do so.70

(64) Finally, the Notifying Party submits that a segmentation of the market for the provision

of POS terminals and related services by type of POS terminals would not be

appropriate, because traditional POS providers also exercise a meaningful constraint

on alternative players, who provide mPOS card readers.71


(65) The Commission’s market investigation was not fully conclusive on whether the

provision of POS terminals and related services forms a separate product market from

merchant acquiring. The majority of merchants indicated that they procure POS

terminals and merchant acquiring services together. This holds true for large

merchants as well, although a larger proportion of large merchants sources POS

terminals separately than for SMEs. When asked whether or not the same person in

the organisation is responsible for the procurement of merchant acquiring services and

POS terminals, both models were similarly common.72

(66) With regard to a further sub-segmentation of a potential market for the provision of

POS terminals, the vast majority of merchants and merchant acquirers indicated that

POS terminals are interoperable with any scheme network.73 The majority of

merchants and merchant acquirers did indicate that differences in the provision of

different types of POS terminals exist. For example, different purchase / rental prices

were mentioned, as well as different capabilities and services of the devices. For

smartPOS terminals for example, digital services such as applications need to be

offered to unlock functionalities of the device.74

(67) Ultimately, the questions of whether POS terminals form a separate product market

from merchant acquiring services and whether further sub-segmentation, by the type

of POS terminal75 is appropriate can be left open, as the Commission finds that the

Transaction does not lead to competitive concerns under any product market definition

set out above.

70 Form CO, paragraphs 113 and 114.




merchant acquirers.


merchant acquirers.

75 A sub-segmentation by customer size, as suggested in case M.9357 – FIS/Worldpay by the Notifying Party

(Fidelity Information Services, Inc.) is not considered appropriate, in line with the findings for merchant

acquiring (paragraph (40) to (44))

17



(68) In its decisional practice, the Commission considered that the market for the supply of

POS to merchants is likely national in scope but eventually left the question open.76


(69) The Notifying Party submits that the relevant geographic market for the provision of

POS terminals and related services is EEA-wide, and considers that the same

arguments that have been put forward in its claim that the relevant geographic market

for retail merchant acquiring is EEA-wide also apply to the provision of POS terminals

and related services.77 As an illustration of the increased presence of multinational and

alternative foreign players in the Italian market, the Notifying Party focuses on the

example of SumUp, who provided [BUSINESS SECRET – NEXI’S ESTIMATE] POS in

Italy in 2017, [BUSINESS SECRET – NEXI’S ESTIMATE] in 2018 and [BUSINESS

SECRET – NEXI’S ESTIMATE] in 2019, being in 2019 part of the top [5-10] providers

of POS terminals in Italy.78 The Notifying Party suggests that this example evidences

the fact that it is not essential to have a local presence or local service staff to provide

POS terminals and related services to merchants in Italy.

(70) Moreover, the Notifying Party submits that the existence of a domestic scheme

(PagoBancomat) is not an obstacle to the provision of POS terminals and related

services to customers in Italy by non-Italian players, since such players could either

adopt the same payment protocol as the one used by PagoBancomat or request that

PagoBancomat certifies their proprietary protocol. The Notifying Party however

acknowledges that this latter option could take up to [BUSINESS SECRET – NEXI’S

ESTIMATE] months.79


(71) The Commission’s market investigation gave indications that the market for the

provision of POS terminals could be national in scope. The majority of merchants and

merchant acquirers indicated that a local presence in Italy is necessary to supply POS

terminals in Italy. Reasons mentioned include local technical assistance and

maintenance, as well as language and cultural aspects.80 Despite these results, the

majority of respondents also indicated not to perceive any barriers to supplying POS

terminals on EEA-wide level.81

76 See Cases M.9387, Allied Irish Banks/First Data Corporation/Semeral, M.9357, FIS/Worldpay, and

M.7873, Worldline/Equens/Paysquare.


78 Form CO, paragraph 157 and 158.



merchant acquirers.


merchant acquirers.

18

(72) Ultimately, the question whether the appropriate geographic market definition is EEA-

wide or national can be left open, as the Commission considers that the Transaction

does not cause competitive concerns for either geographic market definition.

4.2.4. Payment card processing – acquiring processing



(73) The Commission previously considered a distinct market for card processing and

within that market, it has discussed the existence of separate relevant markets for

acquiring processing services and issuing processing services. The exact market

definition was ultimately left open.82 Within acquiring processing, the Commission

has identified a possible further sub-segmentation based on (i) the payment card

scheme (domestic v. international) and (ii) the platform, distinguishing between

physical POS terminals and through web-enabled interfaces (e-commerce). The exact

market definition was ultimately left open.83


(74) The Notifying Party considers that a distinction in processing between POS and web-

enabled transactions does not appear appropriate neither at EEA level, nor in Italy,

since the activity of processing POS and web-enabled transaction are the same, and

the fees for the processing of POS terminals and web-enabled transactions are

substantially similar.84 The Notifying Party nonetheless considers that the exact scope

of the product market can be left open.85


(75) The market investigation did not provide any indications suggesting that the

Commission should depart from its past decisional practice.

(76) In any event, the Commission considers that, for the purpose of the present case, the

question of whether acquiring processing forms a single relevant product market or

whether it would be appropriate to segment it further according to the payment card

scheme or the platform can be left open, since the Commission considers that the

Transaction does not raise serious doubts as to its compatibility with the internal

market regardless of the product market definition.

82 See Cases M.9452, Global Payments/TSYS, M.7873, Worldline/Equens/Paysquare, and M.7241, Advent

International/Bain Capital Investors/Nets Holding

83 See Cases M.9452, Global Payments/TSYS, M.8073, Advent International/Bain Capital/Setefi

Services/Intesa Sanpaolo Card, and M.7241, Advent International/Bain Capital Investors/Nets Holding.



19



(77) In its decisional practice, the Commission has previously left open whether the

provision of payment card processing services, in general, and of acquiring processing

services, in particular, is national or EEA-wide in scope.86


(78) The Notifying Party submits that the relevant geographic market for payment card

processing, in general, and acquiring processing, in particular, is at least EEA-wide,

and considers that the same arguments that have been put forward in its claim that the

relevant geographic market for retail merchant acquiring is EEA-wide also apply to

acquiring processing.87 The Notifying Party explains that additional reasons for the

geographic market for acquiring processing to be considered EEA-wide are the

increased presence of multinational and alternative players in Italy and the absence of

requirement to be an Italian company, or to have a local presence or staff in Italy to

perform acquiring processing activities on the Italian market. In support of this, the

Notifying Party explains that Nexi [BUSINESS SECRET – SUPPLY SOURCES].88

(79) In addition, the Notifying Party submits that the “passporting” rules provided under

the PSD2 allow processors to provide processing services in Member States other than

their home country.89

(80) Finally, the Notifying Party claims that the existence of domestic schemes is not an

obstacle to the performance of acquiring processing activities by non-Italian players

in Italy, because even where domestic schemes require different procedures or

certifications, processors may partner with local banks to provide the required

services. As an illustration, the Notifying Party explains that [BUSINESS SECRETS –

COMMERCIAL STRATEGY] has partnered with [BUSINESS SECRETS –

COMMERCIAL STRATEGY] to provide processing services in Italy.90


(81) The market investigation did not provide any indications suggesting that the

Commission should depart from its past decisional practice.

(82) In any event, the Commission considers that, for the purpose of the present case, the

question of whether the relevant geographic market for acquiring processing is EEA-

wide or national can be left open, since the Commission finds that the Transaction

does not raise serious doubts as to its compatibility with the internal market regardless

of the geographic market definition.

86 See Cases M.9452, Global Payments/TSYS, M.7873, Worldline/Equens/Paysquare, and M.7241, Advent

International/Bain Capital Investors/Nets Holding.





20

4.3. Framework of the competitive assessment

(83) Under Articles 2(2) and 2(3) of the Merger Regulation, the Commission must assess

whether a proposed concentration would significantly impede effective competition

in the internal market or in a substantial part of it, in particular through the creation or

strengthening of a dominant position.

(84) A merger can entail horizontal effects. In this respect, the Commission Guidelines on

the assessment of horizontal mergers under the Merger Regulation (“the Horizontal

Merger Guidelines”)91 distinguish between two main ways in which mergers between

actual or potential competitors on the same relevant market may significantly impede

effective competition, namely (a) by eliminating important competitive constraints on

one or more firms, which consequently would have increased market power, without

resorting to coordinated behaviour (non-coordinated effects); and (b) by changing the

nature of competition in such a way that firms that previously were not coordinating

their behaviour are now significantly more likely to coordinate and raise prices or

otherwise harm effective competition. A merger may also make coordination easier,

more stable or more effective for firms which were coordinating prior to the merger

(coordinated effects).92

(85) In addition, a merger can also entail vertical effects when it involves companies

operating at different levels of the same supply chain. Pursuant to the Commission

Guidelines on the assessment of non-horizontal mergers under the Council Regulation

on the control of concentrations between undertakings (the “Non-Horizontal Merger

Guidelines”),93 vertical mergers do not entail the loss of direct competition between

merging firms in the same relevant market and provide scope for efficiencies.

However, there are circumstances in which vertical mergers may significantly impede

effective competition. This is in particular the case if they give rise to foreclosure.94

The Non-Horizontal Merger Guidelines distinguish between two forms of foreclosure:

input foreclosure, where the merger is likely to raise costs of downstream rivals by

restricting their access to an important input, and customer foreclosure, where the

merger is likely to foreclose upstream rivals by restricting their access to a sufficient

customer base.95

4.4. Overview of affected markets

(86) Nexi and ISP Acquiring are both active in the provision of merchant acquiring services

at retail level to merchants, as well as in the provision of POS terminals and related

services. In addition, Nexi is active in the provision of merchant acquiring services at

wholesale level to banks, as well as in the provision of acquiring processing services.

(87) As a result, the Transaction gives rise to two horizontally affected markets with respect

to :

91 Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of

concentrations between undertakings, OJ C 31, 5.2.2004 p.5.

92 Horizontal Merger Guidelines, paragraph 22.

93 OJ C 265, 18.10.2008, p. 6.

94 Non-Horizontal Merger Guidelines, para 18.

95 Non-Horizontal Merger Guidelines, para 30.

21

the provision of merchant acquiring services at retail level to merchants

(section 4.5.1),

the provision of POS terminals and related services (section 4.5.2).

(88) In addition, the Transaction gives rise to three vertical relationships, namely:

Wholesale merchant acquiring (upstream) with retail merchant acquiring

(downstream) (Section 4.6.1)

Provision of POS terminals and related services (upstream) with retail

merchant acquiring (downstream) (Section 4.6.2)

Acquiring processing (upstream) with retail merchant acquiring (downstream)

(Section 4.6.3)

4.5. Competitive assessment of the horizontal overlaps

(89) As regards the Transaction, the Commission considers it appropriate to focus its

assessment of horizontal effects on non-coordinated effects. In addition to it, a short

coordinated effects assessment is however carried out in Section 4.5.3.

4.5.1. Merchant acquiring at retail level

(90) Both Parties are active in the provision of merchant acquiring services at retail level

to merchants. At EEA level, the Parties’ combined market shares for all the plausible

sub-segments identified above in paragraphs (35) and (38) are relatively low, and in

absolute terms remain below 5% for all sub-segments. The Notifying Party has

provided the Commission with market shares estimates for all the plausible sub-

segments identified above in paragraphs (35) and (38) in Italy.96 Table 1 below

provides the detail of the Parties’ and their competitor’s market shares for a

hypothetical market for retail merchant acquiring in Italy (without any further sub-

segmentation). Table 2 below summarises the Parties’ market shares for each of the

potential sub-segments identified above in paragraphs (35) and (38) in Italy. The

complete data on the Parties’ and their competitors’ market shares for all plausible

sub-segments discussed above in paragraphs (35) and (38) in Italy can be found in

Table 3 to Table 12 below.97

96 At EEA level, the Parties’ combined market shares are small, ranging from [0-5]% to [0-5]%, depending on

the potential sub-segment considered.

97 For the potential segments of transactions performed on debit cards, transactions performed on credit cards,

transaction performed using Visa cards, transactions performed using MasterCard cards, transactions for

large merchants and transactions for SMEs, the Notifying Party argues that it was not possible to find

reliable data on their competitor’s sales.

30

(95) In addition, the Notifying Party considers that a material share of ISP Acquiring’s

volumes is represented by clients that Nexi would not be in a position to credibly

supply. In particular, because [BUSINESS SECRET - SALES POLICIES, KNOW-HOW,

MARKETING PLANS]. The Notifying Party indicates that customers under any of

these four categories would account for about [10-20]% of ISP Acquiring volumes.100

(96) The Notifying Party also submits that large merchants (who account for [50-60]% of

volumes for Nexi and [50-60]% for ISP) are sophisticated buyers who have strong

countervailing buying power and can switch easily.101 The Notifying Party explains

that [90-100]% of the contracts of both Parties for large merchants are [BUSINESS

SECRET – SALES STARTEGY] years in duration, [90-100]% of these contracts have

[BUSINESS SECRET – SALES STARTEGY], and [80-90]% of Nexi contracts, on the

one hand, and [60-70]% of ISP Acquiring’s contracts, on the other hand, have

[BUSINESS SECRET – SALES STARTEGY]. The Notifying Party further submits that

[BUSINESS SECRET – CUSTOMERS’ BEHAVIOUR].102 In addition, the Notifying

Party claims that a number of their large merchant customers, representing [40-50]%

of Nexi’s yearly transaction volumes in 2018-2019 and [20-30]% of ISP Acquiring

yearly transaction volumes in 2018-2019 [BUSINESS SECRET – SALES

STRATEGY].103

(97) Finally, the Notifying Party claims that the barriers to entry and expansion in the

market are low, so that the Parties are facing competition from new entrants and

alternative players such as SumUp, iZettle, Hobex and myPOS in addition to

established strong players such as Banco BPM, UniCredit and Poste Italiane.104 Above

all, the Notifying Party considers the market for retail merchant acquiring to be an

EEA-wide market (see above paragraph (47)), in which the combined market share

would amount only to [0-5]%.


(98) At EEA level, the Parties’ combined market shares for all the plausible sub-segments

of merchant acquiring identified above in paragraphs (35) and (38) are unproblematic

because these remain below 5% for all sub-segments.

(99) At national level in Italy, it should first be mentioned that responses from competing

merchant acquirers to the Commission’s market investigation provided indications

that the market shares estimates provided by the Notifying Party might have been

over-estimated. A number of major competing merchant acquirers active at retail level

have provided figures for the volumes of transactions that they process which are

higher than the Notifying Party’s estimates provided in the Form CO, while only a

few other indicated lower volumes of transactions than provided by the Notifying

Party in the Form CO.105 However, while this would seem to be indicative that the

Parties’ market share might in fact be lower than indicated in the Form CO, the



102 Form CO, paragraphs 208 – 209 and 212 – 217.




31

Commission was not able to fully reconstruct the market for overall merchant

acquiring at retail level.

(100) First, as regards a potential overall market for retail merchant acquiring in Italy,

while evidencing that Nexi and ISP Acquiring are perceived by their merchant

customers as being the leading two merchant acquirers in Italy,106 market participants

also considered other suppliers to constitute credible alternatives. When asked to rank

merchant acquirers according to their competitive strength in Italy, customers place

Nexi first, followed by ISP acquiring second, UniCredit (whose market share on the

Italian merchant acquiring market overall is [5-10]%, similar to Nexi’s) third, Banca

Sella fourth and BNP Paribas fifth; with ISP Acquiring’s UniCredit’s and Banca

Sella’s average rating being very close to each other.107 It may also be noted that, while

large merchants rated the above-mentioned competitors of the Parties in the same

order, SMEs considered ICCREA to be the number five merchant acquirer in Italy

instead of BNP Paribas. In this context, the Commission notes that contrary to the

Notifying Party’s views, neither customers nor competitors currently consider Fin-

Tech players to be credible players in the Italian market. Overall, the vast majority of

merchants nevertheless considered that, post-Transaction, a sufficient number of

credible alternative suppliers for merchant acquiring services will remain active on the

Italian market.108 Likewise, a majority of competitors took the view that, post-

Transaction, a sufficient number of credible alternative suppliers for merchant

acquiring services will remain active on the Italian market.109

(101) Second, however, the overall results of the market investigation did not sufficiently

clearly indicate that Nexi and ISP Acquiring are close competitors. As mentioned

above in paragraph (100), when asked to rank merchant acquirers according to their

competitive strength in Italy, customers place Nexi first, followed by ISP acquiring

second in terms of average grades. However, when asked to identify competitors that

compete closely with each of Nexi and ISP Acquiring in the market for merchant

acquiring at retail level, only a minority of merchants considered ISP Acquiring to be

Nexi’s closest competitor. The same proportion of respondents considered Unicredit

to be Nexi’s closest competitor.110 In a similar way, only a minority of merchants

considered Nexi as ISP Acquiring’s closest competitor, and a very similar proportion

responded that ISP Acquiring’s closest competitor is Unicredit.111 Market respondents

also frequently mentioned, among the Parties’ closest competitions, players such as

Wordline, Banca Sella and SIA.112 Against this background, the Commission

considers that the market investigation does not support the conclusion that he Parties

are each other’s closest competitor, they nevertheless compete closely with each other

within a group that includes other players, like Unicredit and Banca Sella.

(102) In this context, the Commission notes that the tender data provided by the Parties in

support of their claim that Nexi and ISP Acquiring are not close competitors (see




109 Responses to question 43 of Q2 – Questionnaire to merchants acquirers.




32

paragraph (94) above) appear to have only limited significance based on the results of

the Commission’s market investigation, given that only a minority of customers (and

mostly large customers) organize the renewing of their contracts for merchant

acquiring services through tenders,.113 The market investigation however revealed that

the majority of the customers go through the process of renewing their contracts for

merchant acquiring services via bilateral discussions with two or more potential

providers, while only a minority of them renewed their contracts through other means,

such as tenders, bilateral negotiations carried out with their current merchant acquirer

only, or the roll-over of their existing contracts.114 Therefore, as only a minority of

customers use tenders to renew their contracts, tender data appear of a low evidential

value.

(103) Third, even though switching merchant acquirers entails some burden for merchants,

a vast majority of customers of the Parties made clear that they could and would switch

to another supplier in case of a price increase,115 and a significant proportion of

respondents had indeed switched supplier in the course of the last three years.116

(104) Fourth, as mentioned above in section 4.2.2.2, while currently the evidence is not

sufficient to conclude on an EEA-wide market for retail merchant acquiring, the

market is developing in that direction and there is a growing competitive pressure from

non-Italian players. While competitors do not yet perceive non-Italian merchant

acquirers to exercise significant competitive pressure in Italy,117 the vast majority of

customers would consider switching to non-Italian merchant acquirers in case of a

price increase in Italy,118 and considers non-Italian merchant acquirers as credible

alternatives for the supply of their needs in terms of merchant acquiring services.119

While this appears to be even more the case for large merchants, these elements are

also shared by a majority of SME merchants.120

(105) Fifth, the vast majority of customers and even the majority of competitors who

responded to the market investigation indicated that they do not expect any negative

impact from the Transaction, especially with respect to the evolution of prices, the

quality of the services they receive, the choice of service, as well as innovation.121

Some even indicated that they expect price decreases, choice and quality increases and

more innovation.122

(106) In this context, the Commission notes that a minority of respondents, expected a

negative impact of the Transaction on the different parameters of competition,

including price. One competitor further detailed its respective concerns in a follow-up





117 Responses to question 21 of Q2 – Questionnaire to merchants acquirers.




121 Responses to question 34 of Q1 – Questionnaire to merchants and responses to question 64 of Q2 –

Questionnaire to merchant acquirers.

122 Responses to question 34 of Q1 – Questionnaire to merchants and responses to question 64 of Q2 –

Questionnaire to merchant acquirers.

33

submission of 8 June 2020. While most of the concerns exposed by this competitor

related to non-horizontal aspects of the Transaction, it also expressed the view that

Nexi, through the Transaction, might strengthen its position in card issuing (a market

that is not affected and as a result not discussed in details in the rest of the decision).

Since transactions where the merchant’s merchant acquiring provider is also the issuer

of the card (so-called “on-us” transactions) bear a smaller part of the scheme cost, this

competitor explains that by increasing its presence both in issuing and in merchant

acquiring, Nexi would benefit from a better cost structure compared to its competitors,

allowing it to undercut its competitors’ prices and allow it to marginalize its

competitors.123

(107) With respect to this submission, the Commission first notes Nexi’s arguments in

relation to the merged entity’s cost-advantages following the Transaction. In

particular, Nexi argues such a scenario would imply a pro-competitive efficiency, that

on-us savings are very small, and that, in any event, they could only be made when

the acquiring and issuing processing platforms are connected, [BUSINESS

SECRET].124 Second, the Commission considers that, the scenario presented by the

competitor would lead to a price decrease for customers of the Parties in the short term

(which can be viewed as pro-competitive). Third, it appears questionable whether it

would enable the Parties to raise the prices in the mid-to long term. In particular, all

the arguments presented above regarding the competitive pressure posed by non-

Italian merchant acquirers, and the Parties’ customers’ ability to switch to non-Italian

merchant acquirers in case of a price increase or, more generally, should the conditions

of supply offered by the Parties be worsened, (see in particular paragraph (104) above)

suggest that barriers to entry into the Italian market are not significant. These

arguments apply equally to the theory of harm presented by the competitor of the

Parties, and would prevent the merged entity from engaging successfully into such a

strategy consisting in raising its prices after having eliminated or weakened

competition through price decreases. Therefore, the Commission considers the theory

of harm put forward in the submission of 8 June not to be founded.

(108) The Commission moreover, considers that the arguments set out in paragraphs (99) to

(107) above also apply to the potential sub-segmentation of merchant acquiring based

on (i) the payment card scheme (merchant acquiring for domestic or international card

schemes); (ii) the payment card brand (merchant acquiring for VISA or Mastercard

card schemes); (iii) the payment card type (merchant acquiring for credit or debit

cards); and (iv) the payment platform (merchant acquiring through physical POS

terminals or online), which all address the same categories of merchants, and for which

the Parties’ individual and combined market shares are similar to the ones at retail

level overall.

(109) As regards a potential differentiation within the market for merchant acquiring

according to the size of the merchant, the Notifying Parties’ estimates provide that

the Parties’ combined supply share for SMEs would be moderate post-Transaction

([20-30]%), while their combined supply share for large merchants would be more

significant ([60-70]%) that their combined market share at an overall retail level.

These estimates would appear indicative of closeness of competition between Nexi

and ISP Acquiring with respect to the supply of larger merchants.

123 Submission by [Competitor of the Parties] dated 8 June 2020 - ID 654.

124 Submission by the Notifying Party dated 11 June 2020.

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(110) Albeit significant, the Commission considers that the Parties’ combined supply share

for large merchants does not by itself raise serious doubts as to the compatibility of

the Transaction with the internal market. The market investigation indeed provided

evidence that most of the customer-specific factors that would likely render a potential

price increase from the Parties unsuccessful are even stronger when large merchants

only are considered.

(111) First, an even greater proportion of large merchants (than for merchants overall)

mentioned that they engage in bilateral negotiations with multiple suppliers or tenders

in order to renew their contracts for merchant acquiring,125 which seems indicative of

an even greater ability to switch away from their current supplier, and even more

important resources dedicated to screening the market to get the best deal possible.

(112) Second, even more than all customers considered together, large customers appear to

have a particularly strong ability to switch away to non-Italian merchant acquirers.

Most noticeably, a vast majority of large merchants explained that they would consider

switching to a non-Italian merchant acquirer in case of a price increase in Italy.126

Moreover, large customers tend to source POS terminals and merchant acquiring

separately more often than SMEs do.127 As a result, they could rely on a local provider

of POS terminals, where customer support and proximity to the retail outlets is more

important, while selecting a different supplier, which could be a foreign player for the

supply of merchant acquiring services. To this respect, switching to a non-Italian

merchant acquirer for the provision of their merchant acquiring service would be

comparatively easier for large merchants than for SMEs, who tend to bundle more

frequently their purchases of POS terminals and related services with the procurement

of merchant acquiring services.

(113) Third, even within Italy, large merchants appear to have an even greater ability (than

for merchants overall) to switch away from their current supplier in case of a price

increase,128 and a large majority of them considers that they have either equal or

stronger bargaining power that the Parties when negotiating the supply of merchant

acquiring services.129

(114) Finally, as for merchants overall, the vast majority of large merchants considered that,

post-Transaction, a sufficient number of credible alternative suppliers for merchant

acquiring services will remain active on the Italian market,130 and did not expect any

impact from the Transaction, especially with respect to the evolution of prices, the

quality of the services they receive, the choice of service as well as innovation.131








35

(115) In light of the above, the Commission considers that the Transaction does not raise

serious doubts as to its compatibility with the internal market in relation to the market

for the provision of merchant acquiring services, regardless of whether the relevant

geographic market is considered national or EEA-wide or if the product market is

retail merchant acquiring overall or sub-segmented based on (i) the payment card

scheme (merchant acquiring for domestic or international card schemes); (ii) the

payment card brand (merchant acquiring for VISA or Mastercard card schemes); (iii)

the payment card type (merchant acquiring for credit or debit cards) and (iv) the

payment platform (merchant acquiring through physical POS terminals or online).

4.5.2. Provision of POS terminals and related services

(116) The Transaction gives rise to another horizontally affected possible market with

respect to the supply of POS terminals and related services. Both Nexi and ISP

Acquiring provide some of their customers with POS terminals. At EEA level, the

Parties’ combined market shares are modest, and remain below 5%. In 2017, the

Parties’ combined market share in the Italian market was [20-30]%, [BUSINESS

SECRET – EVOLUTION OF MARKET SHARES] [10-20]% in 2018 and [10-20]%

in 2019. Moreover, while the potential sub-segment of traditional POS terminals was

not affected in neither 2017, 2018 nor 2019, the Parties’ combined market shares in

the potential sub-segment for mPOS was [20-30]% in 2019.

(117) The Notifying Party has provided the Commission with market shares estimates for

the provision of POS terminals and related services in Italy.132 Table 13 to Table 15

below summarises the Parties’ market shares for each of the potential sub-segment

considered. It should be noted that since ISP Acquiring currently obtains POS

terminals only from Nexi, to avoid double-counting, data for ISP Acquiring refer to

the terminals it supplies to its merchants (all of which are sourced from Nexi), while

for Nexi the data excludes POS terminals supplied to ISP Acquiring.

132 At EEA level, the Parties’ combined market shares are only [0-5]% for 2017, 2018 as well as 2019.

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reliable, since the sum of the Parties’ total market size for these two years is not equal

to the total market size for all POS terminals. In addition, the Parties have not

computed market shares for traditional POS and mPOS separately for the year 2017.

(121) Second, a vast majority of customers, as well as a majority of competitors, indicated

that a sufficient number of credible alternative providers of POS terminals and related

services will remain active on the Italian market post-Transaction.134 Moreover, a

majority of customers indicated that they expect no impact from the Transaction on

either the price, the quality, the choice or the innovation for POS terminals.135

Interestingly, a majority of competitors responded that they expect either no impact or

a price decrease for POS terminals and related services in Italy. As one customer puts

it, “We are convinced that standardization of terminals and services will allow a

higher product quality, as well as determine a leveling of prices and the possibility of

using more types of payment, even the most innovative ones that the market can make

available.”136 Another customers mentions that “expectations are for an improvement

of quality, choice of service and innovation”.137 Similarly, a majority of competitors

mentioned that they expect either no impact or an increase in the quality of the service,

the choice offered to customers and the innovation for POS terminals and related

services in Italy.138

(122) If the market for POS terminals was sub-segmented at Italian level according to the

type of POS terminals, the absence of concerns raised in the course of the market

investigation, as well as the fact that customers did not expect any impact from the

Transaction on either the price, the quality, the choice or the innovation for POS

terminals still holds true. In addition, the Commission notes that the potential subs-

segment for the provision of traditional POS terminals, representing [90-100]% of the

total market for POS terminals in 2019, is not affected, while only the potential sub-

segment for the provision of mPOS is. However, in this segment, [BUSINESS SECRET

– MARKET SHARES’ TREND – KNOW-HOW] the Parties’ combined share from [40-

50]% to [20-30]% between 2018 and 2019 would appear to give credit to the Parties’

arguments that new entrants and alternative players (such as SumUp, iZettle, Hobex

and myPOS ), who are particularly active on this segment, pose a significant constraint

by the Parties in Italy.

(123) In light of the above, the Commission considers that the Transaction does not raise

serious doubts as to its compatibility with the internal market in relation to the market

for the provision of POS terminals and related services, regardless of whether the

relevant geographic market is considered national or EEA-wide.


merchant acquirers. With respect to the alternative possible geographic market definition, it should be noted

that a vast majority of customers as well as a vast majority of competitors considered the existence of a

sufficient number of credible alternative suppliers to be even more true at EEA level.





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4.5.3. Coordinated effects

(124) In addition to raising serious doubts as to its compatibility with the internal market

through non-coordinated effects, a merger may also change the nature of competition

in such a way that firms that previously were not coordinating their behaviour, post-

merger may be more likely in a better position to coordinate and raise prices or

otherwise harm effective competition, or make coordination easier, more stable or

more effective for firms which were coordinating prior to the merger (coordinated

effects).139 In assessing coordinated effects, the Commission considers whether (1)

competitors are likely in a position to reach terms of coordination following the

Transaction; (2) it would be possible for competitors to monitor potential deviations

from the terms of coordination, (3) there are deterrent mechanisms to police adherence

to the terms of coordination and (4) reactions of outsiders may jeopardise the outcome

of coordination.

(125) In light of the market structures of the potential markets for retail markets for merchant

acquiring in Italy, as well as the potential markets for the provision of POS terminals,

the Commission considers it to be unlikely that the Transaction would lead to

coordinated effects.

(126) First, in the overall Italian market for the provision of merchant acquiring services

at retail level, the merged entity will have a combined market share of [30-40]% in a

rather fragmented market, where the second biggest competition would have a [5-

10]% market share in Italy. Hence, the market is characterised by significant

asymmetry. Such asymmetry of market positions coupled with differences in business

models pursued by merchant acquirers in Italy (integrated merchant acquirers, such as

UniCredit or ISP Acquiring, banks who rely on wholesale merchant acquiring services

in order to provide those at retail level, and players such as Nexi active at wholesale

and retail level) make coordination generally more challenging, as the interest of the

different types of players may not be aligned. Moreover, prices for merchant acquiring

services are heterogeneous across different customers and at times subjected to

tenders, which would make the monitoring of deviations difficult. While a particularly

aggressive pricing strategy could be deployed as deterrent mechanism, reactions from

non-Italian merchant acquirers would likely make coordination unstable, as they are

already perceived as credible alternatives to Italian players today and customers

indicated that they would be willing to switch to those in the event of price increases

in Italy.

(127) These arguments in relation to a possible overall Italian market for retail merchant

acquiring appear are equally valid if that market were to be further segmented

according to the potential sub-segments identified in paragraphs (21) and (25) above.

In light of these elements, as well as the evidence available to it, the Commission

considers that the Transaction does not raise serious doubts as to its compatibility with

the internal market in relation to potential coordinated effects in the Italian market of

merchant acquiring services at retail level.

(128) Regarding potential coordinated effects in the Italian market for the provision of POS

terminals and related services, the merged entity would have a moderate combined

market share of [10-20]% in a rather fragmented market. In particular, the larger

competitors would have market shares between [5-10]% and [0-5]% and other


40

providers, falling under the “Others” category, would account for more than half of

the market with a [60-70]% market share. As such, it appears that the relatively low

concentration of the market for the provision of POS terminals and related services on

the supply-side would make reaching terms of coordination among POS terminals

providers difficult.140 These considerations would apply even if considering the

market for POS terminals sub-segmented in Italy by type of POS terminal.

(129) In light of these elements, as well as the evidence available to it, the Commission

considers that the Transaction does not raise serious doubts as to its compatibility with

the internal market in relation to potential coordinated effects in the Italian market for

the provision of POS terminals and related services.

4.6. Competitive assessment of the vertical links

4.6.1. Wholesale merchant acquiring (upstream) with retail merchant acquiring

(downstream)

(130) The Parties do not overlap in the provision of merchant acquiring services at wholesale

level, since only Nexi is active in this market, providing wholesale merchant acquiring

services to banks. About half of all its merchant acquiring volumes are at wholesale

level to banks under the so-called Licensing model, while the other half are direct sales

to merchants at retail level under the so-called Direct model and the Referral model.

The vertical relationship between wholesale merchant acquiring (upstream) and retail

merchant acquiring (downstream) is affected both upstream, because Nexi’s market

shares are above 30% for the potential Italian wholesale merchant acquiring market

and some of its sub-divisions, and downstream, because the Parties’ combined market

share is above 30% for the potential Italian retail merchant acquiring market and some

of its sub-divisions.

(131) The Notifying Party has provided the Commission with market shares estimates for

wholesale merchant acquiring for all the plausible sub-segments identified above in

paragraphs (35) and (38) in Italy,141 except for the potential sub-segmentation between

large merchants and SMEs (since wholesale merchant acquiring services are provided

at a wholesale level to banks only, which would always qualify as large customers).

However, the Notifying Party has failed to provide precise market share estimates, as

well as market share estimates for their competitors, for lack of visibility into this

segment. Table 16 below summarises the Parties’ market shares for each of the

potential sub-segment considered. The Parties’ market shares for merchant acquiring

in Italy142 as well as all potential sub-segments discussed above in paragraphs (35) and

(38) are provided above in Table 1 to Table 12.


141 At EEA level, the Notifying Party was not able to provide an estimate of Nexi’s market shares for wholesale

merchant acquiring.

142 At EEA level, the Parties’ combined market shares in retail merchant acquiring are small, ranging from [0-

5]% to [0-5]%, depending on the potential sub-segment considered.

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relationship (of which merchant acquiring is only a minor component). It is unlikely

that customers of another bank (which is currently bundling merchant acquiring

supplied by Nexi with other in-house banking services) would switch to ISP for the

full bundle of their services; and (ii) should they switch for the sourcing of merchant

acquiring services only, the Commission notes that ISP is a retail bank which would

require a much larger retail distribution network to reach and capture merchants from

other banks across Italy.147 As regards impact on competition, the Notifying Party

considers that any input foreclosure strategy would unlikely have a significant impact

on competing banks at retail level, because merchant acquiring services ultimately

represent a small proportion of their overall costs (<5%) compared to the value of the

bundle banks create and sell to merchants. Moreover, there would be no impact on

barriers to entry, since there are sufficient alternative merchant acquirers from which

potential entrants can source wholesale merchant acquiring services.148

(135) In addition, the Commission reviewed a complaint from a competitor149 supporting

the theory of harm that Nexi would enjoy an information advantage in light of its

position as wholesale merchant acquirer vis-à-vis other retail banks when tendering

for large clients. The Commission, however, does not consider this theory of harm

grounded nor merger specific. This theory would be based on the consideration that

Nexi, as a wholesale merchant acquirer, has knowledge of costs for the sourcing of

merchant acquiring services borne by banks and that it might leverage this knowledge

to have a competitive advantage against its rivals at downstream level. The

Commission observes that (i) the market investigation results revealed that banks

served by Nexi define the price of the bundle of services they offer to large customers

independently,150 and (ii) even if this theory was grounded, it would not be merger

specific, considering that Nexi’s knowledge of banks’ costs for merchant acquiring

services would not improve or change post-Transaction.

(136) With respect to potential customer foreclosure, the Notifying Party claims that the

Transaction would have no impact on the current situation, since ISP did merchant

acquiring in-house, therefore, it did not source from wholesalers in the past and is not

a current nor a potential customer of other wholesalers.151


(137) First, as regards ability to engage in a potential input foreclosure strategy, the

Commission considers that, following the Transaction, the merged entity despite its

sizeable market share at wholesale level would likely not have the ability to engage in

full or partial input foreclosure, such as raising the price it charges when supplying

wholesale merchant acquiring services to banks which are active at the retail level for

merchant acquiring services, or making the conditions of supply less favourable.

Respondents to the market investigation, in fact, indicated that they would switch

wholesale merchant acquirer following a price increase or the worsening of supply






43

conditions and that there would be sufficient alternative wholesale merchant acquirers

to switch to, such as SIA, Banca Sella, or ICCREA.152

(138) Second, as regards incentive to engage in a potential input foreclosure strategy, the

Commission considers that, assuming that Nexi would have the ability to put in place

an input foreclosure strategy (which, as explained above, is not plausible), this strategy

would not be profitable. The profit Nexi would lose in the upstream market for the

supply of wholesale merchant acquiring services, following an increase in prices or

the degradation of the service, would not be offset by profit gains at the downstream

level. The market investigation results indicated that Nexi would have no incentive to

put in place an input foreclosure strategy, as it would lose economies of scale at

upstream level, which are considered essential to remain competitive, and considering

that wholesale merchant acquiring services represent Nexi’s core business.153

(139) Third, as regards the effects of a potential input foreclosure strategy, as explained

above, Nexi would have no ability to increase the costs of its customers at wholesale

level, which are its rivals at downstream level, by increasing the price for wholesale

merchant acquiring services. The customers, in fact, would switch to alternative

players. Therefore, the Commission considers that the Transaction will not result in a

significant price increase in the downstream market and will not impede effective

competition.

(140) Finally, as regards a potential customer foreclosure strategy, although, as shown in

Table 1 above, in a potential overall market for retail merchant acquiring in Italy, ISP

Acquiring would hold a [20-30]% market share and the Parties’ combined market

share would amount to [30-40]%, Unicredit being the closest competitor with a [5-

10]% market share, ISP Acquiring sources its wholesale merchant acquiring services

only from Nexi. Following the Transaction, ISP Acquiring will continue sourcing

wholesale merchant acquiring in-house and, therefore, the Transaction will bring no

change in the market. Nexi will not have the ability to foreclose access to ISP

Acquiring as a customer for wholesale merchant acquiring to its rivals in the upstream

market because ISP Acquiring is currently not a customer to other wholesale merchant

acquirers. In addition, the market investigation results did not bring to the

Commission’s attention any concerns regarding a potential customer foreclosure

strategy.

(141) In light of the above, the Commission considers that the Transaction does not give rise

to serious doubts as to its compatibility with the internal market as possibly deriving

from its vertical effects between the provision of wholesale merchant acquiring

services (upstream) and of retail merchant acquiring services (downstream).

4.6.2. Provision of POS terminals and related services (upstream) with retail merchant

acquiring (downstream)

(142) Both Nexi and ISP Acquiring provide their customers with POS terminals. The

vertical relationship between the provision of POS terminals (upstream) and retail

merchant acquiring (downstream) gives rise to an affected market because the market



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share levels are above 30% for retail merchant acquiring and certain of its potential

sub-segments.

(143) The Parties’ market shares for the provision of POS terminals and related services in

Italy are provided above in Table 13. The Parties’ market shares for merchant

acquiring in Italy at retail level154 as well as all potential sub-segments discussed above

in paragraphs (35) and (38) are provided above in Table 1 to Table 12.

(144) Given the Parties’ small market shares in the upstream market for the provision of

POS terminals and related services, and consequently the combined entity’s inability

to foreclose access to the provision of POS terminals and related services post-

Transaction, input foreclosure will not be assessed in this decision.


(145) The Notifying Party considers that there is no risk of customer foreclosure since, as

stated above in paragraph (116), ISP Acquiring is already procuring its POS terminals

exclusively from Nexi pursuant to a long-term agreement, and is therefore not a

current or potential customer of third-party providers of POS terminals.155


(146) First, as regards ability, the Commission considers that, post-Transaction, nothing

would change in terms of access to ISP Acquiring’s customer base. Already today, in

fact, ISP Acquiring sources its POS terminals exclusively from Nexi and, therefore, it

is not a customer for alternative providers of POS terminals. The Notifying Party

would have no ability to foreclose access to ISP Acquiring’s customer base as ISP

Acquiring is not a customer to other players.

(147) Second, as regards incentive and effects, it is not necessary for the Commission to

conclude on whether the Parties would have an incentive to engage in a potential

foreclosure strategy, or whether such a potential input foreclosure strategy would have

meaningful effects on the market, as the lack of ability would already prevent the

Parties to engage in such a potential foreclosure strategy in the first place.

(148) Finally, the market investigation results did not bring any evidence to the

Commission’s attention with respect to a potential customer foreclosure strategy that

the Notifying Party might put in place following the Transaction.


to serious doubts as to its compatibility with the internal market in relation to the

vertical link arising between the provision of POS terminals and related services

(upstream) and retail merchant acquiring (downstream). Acquiring processing

(upstream) with retail merchant acquiring (downstream)

4.6.3. Acquiring processing (upstream) with retail merchant acquiring (downstream)

(150) Both Parties are active in the market for retail merchant acquiring services but only

Nexi is active in the provision of acquiring processing services to other merchant

154 At EEA level, the Parties’ combined market shares in retail merchant acquiring are small, ranging from [0-

5]% to [0-5]%, depending on the potential sub-segment considered.


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(153) The previously mentioned complaint by a competitor159 also covers the vertical

relationship between acquiring processing and merchant acquiring at retail level. It

puts forward that Nexi would have the ability and incentive to foreclose competitors

downstream in the market for retail merchant acquiring to which Nexi supplies

acquiring processing. According to this complaint, Nexi would have the ability to

increase its rivals’ costs in acquiring processing in order to gain a competitive

advantage over them at downstream level.

(154) With regard to this input foreclosure strategy, the Commission firstly notes that

already today, Nexi supplies its acquiring processing services almost exclusively to

ISP Acquiring and, therefore, [BUSINESS SECRET – CUSTOMERS AND QUANTITIES

SOLD]. The Notifying Party would therefore have no ability to foreclose access to

Nexi’s acquiring processing services as Nexi is not an active supplier to acquiring

processing customers other than ISP Acquiring. The very few alternative third-party

customers that Nexi supplies with acquiring processing services represent only [0-5]%

of the transactions it processes and [BUSINESS SECRET – CUSTOMERS AND

QUANTITIES SOLD].

(155) As regards incentive to engage in a potential input foreclosure strategy and effects of

such a potential input foreclosure strategy, it is not necessary for the Commission to

conclude on whether the Parties would have an incentive to engage in a potential input

foreclosure strategy, or whether such a potential input foreclosure strategy would have


Parties to engage in such a potential input foreclosure strategy in the first place.

(156) Second, as regards the possibility to engage in a potential customer foreclosure

strategy, the Commission considers that, post-Transaction, nothing would change in

terms of access to ISP Acquiring as a customer for acquiring processing. Already

today, in fact, ISP Acquiring sources its acquiring processing services exclusively

from Nexi and, therefore, it is not a customer, for alternative providers of acquiring

processing services. The Notifying Party would have no ability to foreclose access to

ISP Acquiring as a customer for acquiring processing as ISP Acquiring is not a

customer, nor actual nor potential, to other players. As regards incentive to engage in

a potential customer foreclosure strategy and effects of such a potential customer

foreclosure strategy, it is not necessary for the Commission to conclude on whether

the Parties would have an incentive to engage in a potential customer foreclosure

strategy, or whether such a potential customer foreclosure strategy would have


Parties to engage in such a potential customer foreclosure strategy in the first place.

(157) Finally, with the exception of the above-mentioned complaint, which appears to be

based on a wrong understanding of Nexi’s market position in acquiring processing,

the market investigation results did not bring any evidence to the Commission’s

attention with respect to a potential input or customer foreclosure strategy that the

Notifying Party might put in place following the Transaction.


serious doubts as to its compatibility with the internal market in relation to the vertical


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link arising between the provision of acquiring processing services (upstream) and of

retail merchant acquiring services (downstream).

5. CONCLUSION

6. For the above reasons, the European Commission has decided not to oppose the notified

operation and to declare it compatible with the internal market and with the EEA

Agreement. This decision is adopted in application of Article 6(1)(b) of the Merger

Regulation and Article 57 of the EEA Agreement.

For the Commission

(Signed)

Margrethe VESTAGER

Executive Vice-President

EUROPEAN COMMISSION...EUROPEAN COMMISSION DG Competition Case M.9759 - NEXI / INTESA SANPAOLO...

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